Atlantic Union Bankshares Corporation · NYSE:AUB
Atlantic Union Bankshares — Q2 2020 Earnings Presentation
26 slides from Atlantic Union Bankshares's earnings presentation, Jul 23, 2020
Slide 1: 2nd Quarter 2020 Earnings Presentation
2nd Quarter 2020 Earnings Presentation Nasdaq: AUB July 23, 2020
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Certain statements in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, projections, predictions, expectati
Slide 3: Additional Information
Additional Information 3 Unaudited Pro Forma Financial Information Any unaudited pro forma financial information included in, or discussed in connection with this presentation, is presented for informational purposes only and does not necessarily reflect the financial results of the combined company
Slide 4: 2020 Operating Environment – New Reality
2020 Operating Environment – New Reality 4 Soundness Profitability Growth AUB(149) AUB LPO (3) At June 30,2020 Assets $19.8B Loans $14.3B Deposits $15.6B Managing through COVID- 19 coronavirus pandemic: • Pivoted to a new remote work and branch operating model • Focused on Teammates, clients, commun
Slide 5: Holistic Response to Covid-19
Teammates • 90% of non-branch Teammates are working remotely • Recognition bonuses for eligible Teammates • Continuing to pay Teammates that have potential exposure • COVID-19 related testing and treatment is free under medical plans • Extra cleaning and protective measures put in place • Educate Te
Slide 6: Paycheck Protection Program (PPP)
6 Paycheck Protection Program (PPP) • AUB had 11.1% of dollar share for VA loans, compared to deposit market share of 7% • AUB effectively shared the top spot for number of PPP loans originated in VA and was #1 among VA headquartered banks • AUB had nearly twice the count as the nearest VA headquart
Slide 7: Paycheck Protection Program (PPP)
7 Paycheck Protection Program (PPP) Note: Virginia branches: AUB 140 Truist 445 Italics indicates a VA HQ'd Lender Rank Lender Count of Loans % of Total 1 Truist Bank 10,203 9.3% 2 Atlantic Union Bank 10,197 9.3% 3 Bank of America, National Association 8,487 7.8% 4 Wells Fargo Bank, National Associa
Slide 8: Loan Modifications as of July 17, 2020
Loan Modifications as of July 17, 2020 8 • As of July 17, ~$1.6 Billion in loans are in some form of a COVID Modification of which 93% of the balances are Commercial loans. • ~$485MM in Commercial loans rolled off their initial modification, ~$350MM made their next payment, ~$5MM rolled into a 2nd m
Slide 9: Asset Quality – COVID-19 Sensitive Loan Segments
Asset Quality – COVID-19 Sensitive Loan Segments 9 Note: Figures may not total to 100% due to rounding 1) Disrupted segment data as of June 30, 2020 Total Loan Portfolio $ 14.3 billion at June 30, 2020 Segments Disrupted by COVID-191: $2.3 Billion Portfolio Highlights No significant exposure to Ener
Slide 10: COVID-19 Sensitive Loan Segment Details
COVID-19 Sensitive Loan Segment Details 10 Retail Trade: ~50% of exposure is convenience stores/gas or auto dealer, ~80% secured by real estate; 20% of clients in PPP Restaurants: Early modifications made; 85% secured by real estate; 25% of clients in PPP Senior Living: Significant liquidity and bra
Slide 11: 2020 Operating Environment – Adapting to the New Reality
2020 Operating Environment – Adapting to the New Reality 11 Soundness Profitability Growth During challenging times, it is important to remember our governing philosophy –“Soundness, Profitability, & Growth – in that order of priority” ➢ This core philosophy is serving us well as we manage the Compa
Slide 12: Q2 2020 Financial Performance At-a-Glance
Q2 2020 Financial Performance At-a-Glance 12 Summarized Income Statement 2Q2020 1Q2020 Net interest income $ 137,305 $ 135,008 Provision for credit losses 34,200 60,196 Noninterest income 35,932 28,907 Noninterest expense 102,814 95,645 Taxes 5,514 985 Net income (GAAP) 30,709 7,089 + Provision for
Slide 13: Q2 Allowance for Credit Loss and Provision for Credit Losses
Q2 Allowance For Credit Loss (ACL) and Provision for Credit Losses 13 Q2 Macroeconomic Forecast Q2 Additional Considerations Regulatory Capital Treatment Moody’s June Forecast • US GDP -33% in Q2; US Unemployment Rate peaks near 14% in Q2 and falls to 9.5% by Q4 2020. • Virginia Unemployment peaks a
Slide 14: Q2 2020 Net Interest Margin
3.56% 3.29% 2.50% 2.70% 2.90% 3.10% 3.30% 3.50% 3.70% Quarter 1 Core NIM Core Loan Yield PPP Loans with Fees Loan Accretion Earning Asset Mix and Cash Yield Core Deposit Rate Funding Mix and Borrowing Rate Quarter 2 Core NIM Net Interest Margin: Drivers of Change 1Q2020 to 2Q2020 -43 bps -4 bps -10
Slide 15: Noninterest Income
15 Noninterest income increased from the prior quarter to $35.9 million from $28.9 million due to: ▪ $10.3 million in gain on the sale of investment securities ▪ Higher in mortgage banking income of $3.8 million due to increased mortgage loan refinance volumes ▪ Interest rate swap income increased $
Slide 16: Q2 2020 Loan Growth
16 Q2 2020 Loan Growth • At quarter end, loans held for investment increased $1.5 billion, or 48.5% (annualized) from the prior quarter, driven by PPP loans • Excluding the effects of PPP, total loans declined by $58.9 million, or 1.9% (annualized), while average loans increased $89.9 million, or 2.
Slide 17: Deposit Growth
17 • Deposits increased $2.1 billion, or 60.9% (annualized) for the quarter, while average deposits increased $1.6 billion, or 48.6% (annualized), from the prior quarter • The deposit increase in the second quarter is primarily due to the government stimulus programs (PPP loans, stimulus checks and
Slide 18: Liquidity Position and Sources
Liquidity Position and Sources 18 • Strong liquidity metrics: ~$7.5 billion in cash, unpledged securities, and secured and unsecured borrowing capacity. Loans to Total Deposits Ratio of 92% • Paycheck Protection Program loans of approximately $1.7 billion funded using deposits, wholesale borrowings,
Slide 19: Strong Capital Position at June 30, 2020
Strong Capital Position at June 30, 2020 19 Capital Ratio Regulatory Well Capitalized Atlantic Union Bankshares* Atlantic Union Bank* Common Equity Tier 1 Ratio (CET1) 7.0% 9.8% 11.7% Tier 1 Capital Ratio 8.5% 11.0% 11.7% Total Risk Based Capital Ratio 10.5% 13.7% 12.5% Leverage Ratio 5.0% 8.8% 9.4%
Slide 20: Appendix
Appendix 7) Atlantic /4 Union Bankshares
Slide 21: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 21 Operating Earnings Per Share The Company has provided supplemental performance measures on a tax-equivalent, tangible, operating, or pre- tax pre-provision basis. These non-GAAP financial measures are a supplement to GAAP, which is used to prepare the Compan
Slide 22: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 22 Operating Earnings Per Share Pre-tax pre-provision (PTPP) earnings excludes the provision for credit losses, which can fluctuate significantly from period-to-period under the recently adopted CECL methodology, merger and rebranding-related costs unrelated to
Slide 23: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 23 Operating Earnings Per Share The operating efficiency ratio (FTE) excludes the amortization of intangible assets and merger-related costs. This measure is similar to the measure utilized by the Company when analyzing corporate performance and is also similar
Slide 24: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 24 Operating Earnings Per Share Net interest income (FTE), which is used in computing net interest margin (FTE), provides valuable additional insight into the net interest margin by adjusting for differences in tax treatment of interest income sources. The enti
Slide 25: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 25 Operating Earnings Per Share Tangible common equity is used in the calculation of certain profitability, capital, and per share ratios. The Company believes tangible common equity and the related ratios are meaningful measures of capital adequacy because the
Slide 26: Reconciliation of Non-GAAP Disclosures
Reconciliation of Non-GAAP Disclosures 26 ($ IN THOUSANDS) Operating Earnings Per Share The Company believes loans held for investment (net of deferred fees and costs), excluding PPP is useful to investors as it provides more clarity on the Company’s organic growth. The Company also believes that th
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